G20 nations funnel $151bn of Covid-19 recovery funding into fossil fuels
Of the Covid-19 recovery funding allocated to energy companies by G20 governments, 56% has been handed to fossil fuel projects, equivalent to $151bn (£119bn).
That is according to the latest data from the Energy Policy Tracker, updated on Wednesday (15 July).
The data reveals that G20 nations have spent at least $120.5bn (£95.5bn) providing unconditional support for fossil fuel firms since Covid-19 was declared a pandemic in March. The largest contributor to this sum is the US, which has provided $58.1bn (£46.1bn) alone.
A further $30.25bn (£24bn) has been provided on a conditional basis, the majority of which was allocated by France.
When both unconditional and conditional support is accounted for, the G20 has spent $32.89 (£26.11) per capital bailing out the fossil fuel sector. In comparison, the per capita spend on support for low-carbon energy generation and energy efficiency to date is $19.33 (£15.34).
Regarding the UK specifically, Ministers have confirmed $13.38bn (£10.6bn) for the low-carbon energy generation and energy efficiency sectors. The majority of this funding has been allocated unconditionally, including the Treasury’s £3bn energy efficiency programme announced last week.
Nonetheless, Whitehall has provided $4.84bn (£3.8bn) of unconditional support for the fossil fuel sector – more than Italy, Mexico, Turkey, Australia, Russia and South Africa.
Lobbying and oil lock-ins
Energy Policy Tracker’s update comes shortly after new analysis from InfluenceMap concluded that the oil and gas sector lobby has been the most active and the most successful since March.
Across Australia, Canada, the US and the EU, oil and gas lobbying bodies made 31 policy interventions between the start of March and the end of June. Almost two-thirds were successful.
Green groups have warned that, in addition to lobbying, plummeting oil prices could hamper the best intentions to deliver a ‘green’ recovery.
The IEA has estimated that oil demand will be one million barrels less per day in 2020 than in 2019. Oil prices dipped below zero for the first time since the industrial revolution in April as producers struggled to grapple with disruption to the energy and transport sectors.
From laggards to leaders?
In a bid to bring companies facing significant environmental challenges on board with the net-zero transition post-Covid-19, BNP Paribas Asset Management has this week launched a new equity fund designed to help high-impact firms align with the Paris Agreement and the Sustainable Development Goals (SDGs).
Called the Environmental Absolute Return Thematic or ‘EARTH’ fund, the fund will support between 25 and 45 businesses.
It will invest in scale-up companies capitalised at more than $1bn each, who are working to develop innovative solutions for the world’s most environmentally damaging sectors – materials, agriculture, industrials and energy. Such companies will be paired with larger firms that operate using “unsustainable or technologically inferior business models vulnerable to transition risk”.
In order to ensure that holdings are not creating unintended negative consequences for the environment or society as they advance decarbonisation, all holdings will be mapped according to the SDGs. BNP Paribas’ sustainability strategy notably commits it to align operations with the SDGs and to help ensure the carbon intensity of the global energy sector falls by 85% by 2040.
“We believe that companies positioned to help address the significant environmental challenges we face will outperform those that either take no action or indeed contribute to these issues,” BNP Paribas’ co-manager for the EARTH fund Edward Lees said.
“The latter will increasingly be at risk of having stranded assets and will be forced to take write-downs. Meanwhile, as population growth boosts demand for food, water and energy, causing increasing CO₂ emissions, waste production and unsustainable consumption, the market for solutions to meet these needs could amount to trillions of dollars and will be increasingly encouraged by governments.”